Portfolio Management Services (PMS) is a customized investment product and invest in securities like equity, fixed income securities etc. PMS provide comfort to the investors and generate superior returns in the long run. Investors who are looking for an alternative to direct equity can look to invest in PMS.
Who is an ideal PMS investor?
The Investment solutions provided by PMS cater to a NICHE SEGMENT of clients. The clients can be Individuals or Institutions entities with HIGH NET WORTH.
The offerings are usually ideal for investors:
who are looking to invest in asset classes like equity, fixed income, structured products etc ,
who desire personalised investment solutions ,
who desire long-term wealth creation ,who appreciate a HIGH LEVEL OF SERVICE.
So let us to come to main point – why invest in a PMS when one can directly invest in similar Equity stocks and can have a daily tracking?
Successful Investing essentially requires:
A PMS portfolio, generally being a concentrated portfolio consisting around 20-25 stocks, each portfolio company can be given the required dedicated time and effort and many new opportunities can be looked for. In the past we have seen that professional fund management has generated better returns than Direct Equities. Moreover, PMS have generated superior returns compared to MFs & Indices (proxy for direct investment) over longer tenures.
The service provides professional management of portfolios with the objective of delivering consistent long-term performance while controlling risk.
It is important to recognise that portfolios need to be constantly monitored and periodic changes made to optimise the results.
A research team responsible for establishing the client's investment strategy and providing the PMS provider real time information to support it, backs any firm's portfolio managers.
Portfolio Management Service provider gives the client a customised service. The company takes care of all the administrative aspects of the client's portfolio with a periodic reporting (usually daily) on the overall status of the portfolio and performance.
The Portfolio Manager has fair amount of flexibility in terms of holding cash (can go up to 100% also depending on the market conditions). He can create a reasonable concentration in the investor portfolios by investing disproportionate amounts in favour of compelling opportunities.
PMS provide comprehensive communications and performance reporting. Investors will get regular statements and updates from the firm. Web-enabled access will ensure that client is just a click away from all information relating to his investment. Your account statements will give you a complete picture of which individual securities you hold, as well as the number of shares you own.
It will also usually provide:
PMS give select clients the benefit of tailor made investment advice designed to achieve his financial objectives. It can be structured to automatically exclude investments you may own in another account or investments you would prefer not to own. For example, if you are a long-term employee in a company and you have acquired concentrated stock positions over the years and have become over exposed to few company's stock, a separately managed account provides you with the ability to exclude that stock from your portfolio.
The tax liability of a PMS investor would remain the same as if the investor is accessing the capital market directly. However, the investor should consult his tax advisor for the same. The Portfolio Manager ideally provides audited statement of accounts at the end of the financial year to aid the investor in assessing his/ her tax liabilities.
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